Tue, Apr. 21, 1:19 PM
- Bank of Montreal (NYSE:BMO), CIBC (NYSE:CM), Scotiabank (NYSE:BNS), RBC (NYSE:RY), and TD Bank (NYSE:TD) all sold options to U.S. shale drillers looking to hedge against lower prices back when oil was above $90 per barrel. Now they're on the hook for at least $478M, according to Bloomberg.
- National Bank analyst Peter Routledge says it's a sizable liability, but given the heavy regulation of Canadian lenders, it's a pretty good bet they hedged their exposure. If you want to worry about Canadian banks as regards to oil. says Routledge, it's on the lending side, not the capital markets side.
- “We actively hedge and manage our exposures to fluctuations in commodity prices,” says BMO's Anthony DeMartino, head of commodity trading.
Wed, Apr. 1, 9:17 AM
- "It's inevitable that there will be some restructurings of loans that come, but on the other side of that the net will be positive," says Bank of Montreal (NYSE:BMO) CEO William Downe, expecting a pickup in M&A activity thanks to troubles in the oil patch.
- There's going to be a reconfiguration," he tells shareholders at the bank's annual meeting. "We expect to play a part in advising companies in the sector and we also expect to be involved in the financing of ventures that result from this."
- He also notes the price declines in heating oil and gasoline are effectively putting another $20 per week in the pockets of North Americans - "that's net stimulative to the economy."
- Downe says the bank is focused on organic growth, and has no acquisition plans at the moment.
Mon, Mar. 23, 12:29 PM
- The Regional Bank Coalition is urging D.C. to remove the $50B threshold at which, under current Dodd-Frank rules, lenders are subject to boosted regulatory standards.
- The fight thus far has centered on whether to raise that bar (something even the Fed appears to support) or scrap it altogether.
- "Regional banks do not create systemic exposure through market making or complex networks of interconnected transactions with other financial firms," says the group.
- Regional Bank Coalition website
- The group: SunTrust (NYSE:STI), Regions Financial (NYSE:RF), Huntington Bancshares (NASDAQ:HBAN), Fifth Third (NASDAQ:FITB), Capital One (NYSE:COF), BMO Financial (NYSE:BMO), Compass (NYSE:BBVA), BB&T (NYSE:BBT), Bank of the West, and AmEx (NYSE:AXP).
- ETFs: KRE, KBE, IAT, KBWB, QABA, KRU, KBWR, KRS
Tue, Mar. 17, 7:56 AM
- It wasn't long ago when Canadian finance minister Jim Flaherty warned of overheating the housing market when lenders dropped benchmark mortgage rates below 3%. What his successor Joe Oliver might say or do is unknown, but Bank of Montreal (NYSE:BMO) today cuts its 5-year, fixed-rate mortgage by 20 basis points to 2.79% - it would be the lowest posted rate of the country's Big Five banks.
- BMO's move comes as it and others in the industry battle slower consumer loan growth, not to mention drags in other operations thanks to the crash in oil prices, and the bank last month missed FQ1 estimates.
- ETFs: EWC, CNDA, EWCS, FCAN, QCAN
Mon, Mar. 16, 8:40 AM
- Chicago-based BMO Harris Bank says the move - allowing customers to withdraw cash with a smartphone app rather than an ATM card - will allow for the double-whammy of faster transactions and reduced fraud.
- Banks, of course, are under pressure to save money by slashing branch networks while also cutting down on fraud - so this potentially gives BMO a leg up on its competition.
- BMO says a mobile cash transaction takes 15 seconds compared with 45 when using a debit card. It's also safer since the customer doesn't need to insert a card, thus eliminating the change of "skimming" devices pulling information.
- Why roll it out in the States instead of Canada? Card security in this country lags behind that up north.
Wed, Mar. 11, 7:07 AM
- UBS has poached a U.S. team of some 15 oil and gas investment bankers from Bank of Montreal (NYSE:BMO), significantly weakening the energy deal making capacity at Canada’s fourth-largest bank, Reuters reports.
- Those leaving BMO are part of a specialist group dubbed Acquisitions & Divestitures. The group carries out the complex engineering and technical research needed to value oil and gas deposits far beneath the earth's surface.
Thu, Mar. 5, 8:28 PM
- The minimum Tier 1 common capital ratio for banks is 5%, according to the Fed, and here's how the 31 lenders stacked up under the central bank's severely adverse scenario vs. a year ago (h/t: WSJ):
- Deutshce Bank (NYSE:DB): 34.7%, not tested a year ago
- DIscover (NYSE:DFS): 13.9% vs. 13.2% a year ago
- Bank of New York Mellon (NYSE:BK): 12.6% vs. 13.1%
- American Express (NYSE:AXP): 12.5% vs. 12.1%
- Northern Trust (NASDAQ:NTRS): 12.3% vs. 11.7%
- State Street (NYSE:STT): 11.8% vs. 13.3%
- Citizens Financial (NYSE:CFG): 10.7% vs. 10.7%
- KeyCorp (NYSE:KEY): 9.9% vs. 9.2%
- Capital One (NYSE:COF): 9.5% vs. 7.8%
- PNC Financial (NYSE:PNC): 9.5% vs. 9%
- Santander Holdings USA (SAN's U.S. unit): 9.4% vs. 7.3%; shares +0.8% after hours
- BMO Financial (BMO's U.S. unit): 9% vs. 7.6%
- Comerica (NYSE:CMA): 9% vs. 8.6%
- Huntington Bancshares (NASDAQ:HBAN): 9% vs. 7.4%
- HSBC North America (NYSE:HSBC): 8.9% vs. 6.6%
- U.S. Bancorp (NYSE:USB): 8.5% vs. 8.2%
- Regions Financial (NYSE:RF): 8.3% vs. 8.9%
- Citigroup (NYSE:C): 8.2% vs. 7.2%
- SunTrust (NYSE:STI): 8.2% vs. 8.8%
- BB&T (NYSE:BBT): 8.1% vs. 8.4%
- MUFG Americas Holdings (NYSE:MTU): 8% vs. 8.1%
- Ally Financial (NYSE:ALLY): 7.9% vs. 6.3%
- Fifth Third Bancorp (NASDAQ:FITB): 7.9% vs. 8.4%
- Wells Fargo (NYSE:WFC): 7.5% vs. 8.2%
- M&T Bank (NYSE:MTB): 7.3% vs. 6.2%
- Bank of America (NYSE:BAC): 7.1% vs. 5.9%; shares +2.1% after hours
- JPMorgan (NYSE:JPM): 6.5% vs. 6.3%
- BBVA Compass (NYSE:BBVA): 6.3% vs. 8.5%
- Goldman Sachs (NYSE:GS): 6.3% vs. 6.9%
- Morgan Stanley (NYSE:MS): 6.2% vs. 6.1%
- Zions Bancorp (NASDAQ:ZION): 5.1% vs. 3.6%; shares -1.7% after hours
- The lenders were also informed today whether their capital return plans would put them below the Fed's 5% threshold, giving them a 6-day window with which to change those requests, if need be. Last year, both BofA and Goldman scaled back their dividend/buyback requests, allowing them to pass the CCAR. This year's CCAR results will be announced on Wednesday.
- 2015 Stress Test Methodology and Results
Tue, Feb. 24, 7:51 AM
Tue, Feb. 24, 7:44 AM
- "BMO's first quarter results reflect the impact of an unsettled environment in which we saw significant movements in oil prices, long-term interest rates and the Canadian dollar," says CEO Bill Downe of his bank's nine cent earnings miss.
- The dividend is left unchanged at C$0.80.
- Canadian P&C banking adjusted net income of $503M up 4% Y/Y, partly thanks to higher revenue and lower loan loss provisions, partly offset by higher expenses.
- U.S. P&C banking adjusted net income of $205M up 14% Y/Y.
- Wealth Management adjusted net income of $186M up marginally from a year ago. AUM of $852B up 43% Y/Y, with the purchased F&C business contributing more than half of that increase.
- Capital Markets net income of $221M off 20% Y/Y, with revenue off 5%.
- CET1 ratio of 10.1%, unchanged from the previous quarter. Book value per share of $52.98 up 10% Q/Q.
- Conference call at 2 ET
- Previously: Bank of Montreal misses by C$0.09, beats on revenue (Feb. 24)
- BMO flat premarket, but off 13% YTD.
Tue, Feb. 24, 7:32 AM
Mon, Feb. 23, 5:30 PM
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Thu, Feb. 19, 12:27 PM
- "Given the historical relationship between oil prices and the impairment rate for energy-related loans, we expect some mild erosion in these loans' asset quality in the coming quarters," says Moody's David Beattie. Further, revenue from both underwriting and capital markets action could fall thanks to spending cuts by the banks' oil and gas clients.
- More? Consumer credit costs could worsen thanks to slowdowns in the economies of Canada's oil-producing regions.
- Direct loan exposures to the energy sector vary by bank, says Moody's, but Scotiabank (BNS -1.3%) and RBC (RY -1%) are particularly vulnerable.
- On the positive side, the size and diversity of Canada's Big Six function as "shock absorbers" against rising energy-related credit costs, and the fall in the loonie acts as a "natural hedge" by cutting costs and limiting the impact on oil producers whose product is priced strictly in appreciating greenbacks.
- The rest of the Big Six: Bank of Montreal (BMO -1%) CIBC (CM -1.3%), TD Bank (TD -1.3%), National Bank of Canada (OTCPK:NTIOF -0.8%).
Tue, Feb. 3, 1:08 PM
- Outperforming today as equities go green, rates rise, and oil pops to $51.63 per barrel, is Canada, with stocks in Toronto up 1.25%. Outperforming the broad Canadian market are the beaten-up banks, where investors have been bailing of late thanks to worries about the slowing economy there, not to mention a big drop-off in deal flow from the energy sector.
- Royal Bank (RBC +3.6%), TD Bank (TD +3.7%), Bank of Montreal (BMO +4%), Scotiabank (BNS +4.4%), CIBC (CM +4%).
- Previously: Canadian lenders give more ground as Barclays downgrades (Jan. 30)
Fri, Jan. 30, 9:42 AM
- Citing the effect on business from falling oil prices and noting the Bank of Canada's worry over growth, Barclays downgrades TD Bank (TD -2.8%), RBC (RY -3.2%), BMO (BMO -3.3%), and Laurentian Bank (OTCPK:LRCDF) - all to Underweight from Equal Weight.
- Not downgraded, but also continuing to feel the chill in Canada's economy are Scotiabank (BNS -3.7%) and CIBC (CM -3.1%).
- Previously: Canadian GDP unexpectedly slips in November (Jan. 30)
Tue, Jan. 27, 5:09 PM
- First it was Royal Bank of Canada (NYSE:RY) and then Bank of Montreal (NYSE:BMO) quickly followed suit - each cutting their prime lending rate to 2.85% from 3%. But hey, that's just 15 basis points vs. the Bank of Canada's 25 basis point cut (to 0.75%) last week.
- In any case, it should provide at least some relief for a perky property market which could find itself under pressure thanks to the plunge in oil prices.
- Previously: Surprise rate cut not yet feeding through in Canada (Jan. 23)
Fri, Jan. 23, 3:29 PM
- TD Bank (TD +1.4%) has no plans to cut its prime rate in line with the central bank's 25 basis point rate cut this week, and Royal Bank of Canada (RY +1.2%) is also holding off, at least for now.
- "Like the others," says RBC CEO David McKay, "[we] were completely caught off guard ... I need to catch up with my team and digest what’s going on in the market and figure out what we’re going to do from here.”
- Bank of Montreal (BMO +0.6%) and CIBC (CM -0.1%) are keeping mum about their plans at the moment, and Scotiabank (BNS +0.3%) says there will be an announcement if there's any change to report.
- The purpose of the BOC rate cut, says Canaccord's Gabriel Dechaine, was to ease the affordability of Canadians' very high debt loads. He believes there will be "regulatory pressure" for the country's big banks to follow suit.
- ETFs: EWC, CNDA, EWCS, FCAN, QCAN
- Previously: Unexpected rate cut for Canada (Jan. 21)
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